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TMI Blog1969 (4) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... well. This provision of the amending Act was made retrospective with effect from 15th June, 1957. The claim set out in the plaints is that as a result of the amending legislation, the levy of the tax and its collection had become illegal, and that they are consequently entitled to a refund of the amount paid by them under coercion. The suits were resisted by the State Government. It pleaded, inter alia, that the levy and collection of the purchase tax in question is neither illegal nor without jurisdiction and that the plaintiffs are not entitled to the refund claimed by them. The assessment, when made, was according to law and the amounts were voluntarily paid. The levy was legal and cannot be deemed to have been made under a mistake of law or of fact. Nor can the payment be said to be vitiated by a mistake of law or by coercion. It was further pleaded that the assessments were finalised before the commencement of the amending Act. As the pleadings and the contentions in the several suits were almost identical, the issues that had been settled for trial were likewise similar in all the suits. The learned Subordinate Judge upheld the claim of the plaintiffs and granted the pray ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax and by a determination of the precise amount said to have been illegally levied? Therefore, counsel urged that quite apart from the bar of jurisdiction enacted by section 36, the suit was beyond the competence of a civil court, inasmuch as the court was necessarily compelled in its inquiry into the merits of the claim, to entrench on the exclusive jurisdiction of the statutory tribunals. At the outset, it may be pointed out that the second aspect of the argument was pressed by counsel apparently on a misapprehension of the true position. Our attention was invited to paragraph (8) of the judgment of the lower court in O.S. No. 49 of 1963 (A.S. No. 121 of 1965) wherein reference was made to the interrogatories served on the defendant and the answers thereto, submitted by the latter under exhibit A-5. It is clear from the answers given by the defendant that there was an admission on the part of the defendant that the purchases of copra in respect of which the levy in dispute was made, were proved to have been made from licensed dealers who had admittedly paid tax on their entire turnover. The position, therefore, is that before the sales of copra were effected to each of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in Dhulabhai v. State of Madhya Pradesh[1968] 22 S.T.C. 416; A.I.R. 1969 S.C. 78. There was an elaborate review of all the leading authorities and the principles have been formulated in that case in several propositions, summing up the effect of all the diverse pronouncements on the subject. There were four suits launched by the appellants to recover the sales tax alleged to have been illegally realised from them. The illegality arose because the levy was made on sales in the State of Madhya Bharat on imports, in a manner offensive to article 301 of the Constitution, inasmuch as an equal tax was not levied on similar goods produced within the taxing State. The notification under which the levy was made was held to be not constitutional by the Supreme Court in State of Madhya Pradesh v. Bhailal Bhai[1964] 15 S.T.C. 450; A.I.R. 1964 S.C. 1006. The decision was followed by the institution of the suits which were decided by the Supreme Court in the case referred to above. The actions failed in the High Court but the claim for recovery of the tax was upheld by their Lordships of the Supreme Court. His Lordship the Chief Justice, who spoke for the court, observed in the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have set out the gist of the propositions laid down by the Supreme Court, which define the extent or content of the jurisdiction of civil courts in cases of this description. The counsel on either side have presented their respective points of view in the light of the said propositions of law. The indisputable facts which gave rise to these appeals are that under the Sales Tax Act, as the provisions then stood, coconuts and copra were separately assessable to a single point tax at the date of the assessment. The levy that is challenged related to turnover of first purchases of copra commencing from 15th June, 1957, and ending with 31st March, 1958. By section 15-A of the amending Act 26 of 1961, the commodity "copra" was eliminated from the list of articles assessable under Schedule III. An explanation was inserted and it was to the effect that the word "coconut" includes copra. The definition of "coconut " as inclusive of copra was given retrospective operation with effect from 15th June, 1957. The result, therefore, was that from 15th June, 1957, if the single point tax on coconuts had been paid, there was no legal basis for a separate levy on the purchases of copra, prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is contention which ignores the basic position that the plaintiffs seek restitution on the allegation that the levy itself has become illegal, or Inoperative. It cannot be doubted and, in fact, it was admitted before us by the learned Government Pleader, that there is no specific provision in the Act providing for restitution or the rectification of an assessment under circumstances analogous to the instant case. We consider that no remedy is available to the plaintiffs under the special enactment. Firstly, an appeal at this distance of time cannot be resorted to as a matter of right. It is on account of a supervening event that has occurred after a considerable lapse of time that the claim for refund has become admissible. Time prescribed for presentation of an appeal has expired before the right to claim the refund has arisen. In the circumstances, the assessee has no unqualified right to have a fresh examination before the appellate forum, because, for the exercise of the jurisdiction by the Appellate Tribunal, the preliminary step of the condonation of the delay is a necessary condition. This is entirely a matter within the discretion of that Tribunal. Consequently, it cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roposition formulated as the fifth one by their Lordships of the Supreme Court envisages a situation comparable to the one indicated by us in the previous paragraph. Their Lordships said: "Where the particular Act contains no machinery for refund of tax collected in excess of constitutional limits or illegally collected a suit lies." The cases on hand, in our opinion, attract the principle thus stated as the fifth proposition in the formulation made by the Supreme Court. It is clear that the remedy of suit is not restricted only to cases where restitution arises by reason of an unconstitutional law. The remedy can be resorted to by the subjects also in cases where there is a retention by the authority of an illegally collected tax, provided the relevant statute contains no machinery for directing a refund. The plaintiffs are, therefore, acting in conformity with this principle in invoking the jurisdiction of civil courts for obtaining restitution for which no provision is made in the statute. It would be superfluous for us to examine in detail the ratio decidendi of the several decisions elaborately considered by the Supreme Court in the recent decision. The learned Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he validity of the rule in Basappa's case(4) was considerably shaken by the observations in State of Kerala v. Ramaswami Iyer Sons[1966] 18 S.T.C. 1; A.I.R. 1966 S.C. 1738 In Basappa's case[1964] 15 S.T.C. 144; A.I.R. 1964 S.C. 1873., it was held that: "Where an assessment of tax includes certains items of taxes which were not taxable by the State and are thus illegal, the separation of the illegal portion is possible only in those cases where the assessment of many matters resulting in amounts of tax which though parts of the whole assessment, stand completely separate. There the court can declare the 'separate, dissected and earmarked' items illegal and excise them from the levy. In doing so, the court does not arrogate to itself the functions of the taxing authorities..........." It was pressed on us by the learned Government Pleader at one stage of the argument that no relief could be granted to the plaintiffs in these cases, because the assessment was a composite one and it was not possible to separate the good part from the bad except by the court arrogating to itself a jurisdiction which it does not have. But, this argument is not valid as pointed out by us earlier. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y attributable to any power conferred by the special enactment. Nor does the special enactment provide any machinery for challenging the illegal retention of the tax that was collected. The learned counsel for the respondents drew our attention to a case in Poulose Bros. v. State of Kerala[1963] 14 S.T.C. 40. , where the Kerala High Court had to deal with a case in which a provision in the Sales Tax Act in pari materia was considered. The decision there turned on an amendment similar to the one that has been effected by Act 26 of 1961. The expression "coconut" was, by an amending Act, made to include copra also and the effect of that amendment was considered by the Kerala High Court. It was decided that the assessment on the turnover relating to the last purchase of copra was not legal. It may be noted that that case did not arise from out of an action for the refund of the moneys but it was brought up before the High Court by way of revision against the decision of the Tribunal. Learned counsel relied upon it only to support their stand that as a result of the amendment, copra has ceased to be a distinct taxable commodity. Learned counsel for Government placed reliance on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the refund or to claim interest on the said amount. It is clear that the claim for interest that is included in the amount specified in the plaint relates only to a short period prior to the institution of the suit. The award of interest during the pendency of the suit is a matter within the discretion of the court, and the claim for the interest prior to the suit that is made in the plaint relates to a very short period. We are of opinion that no valid ground or principle has been made out by the appellant to persuade us not to award interest during the pendency of the suit or for the short period for which it is claimed prior to the institution of the suit. No exception can be taken to the principle that restitution implies the payment of interest at a reasonable rate in order to put the person entitled to restitution in the position which he would have occupied but for the illegal retention of the money. We are of opinion that the decision in Mothey Gangaraju v. State of Andhra Pradesh[1965] 16 S.T.C. 205. cited by the learned Government Pleader rests upon the special facts of that case and does not establish any principle justifying the disallowance of interest in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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